Despite new review, there's still disagreement over validity of UW, Valley Medical alliance

A "re-review" by state attorneys and other outside legal experts has found that the strategic alliance between Valley Medical Center and UW Medicine is legal.

The legality of the alliance was called into question in March by the commissioners of Public Hospital District No. 1, which owns the medical center in Renton.

The district commission in May 2011 voted 3-2 to approve the alliance and bind the district to the contract creating it. The commissioners who voted no pointed out the agreement was rushed and they didn't have adequate time to review it.

In November Dr. Paul Joos was elected to the commission, creating a new three-member majority with the numbers to challenge the alliance.

Dr. Paul Ramsey, CEO of UW Medicine, in a letter to the commissioners June 29 marking the upcoming one-year anniversary of the alliance, wrote the UW's legal team and the commission's legal counsel had discussed the commission's concerns as part of a new review.

"This work has confirmed our previous conclusion that the Strategic Alliance Agreement is legal and is structured to further our shared missions of improving the health of the public in this era of rapid change in healthcare," Ramsey wrote.

Representing the hospital commission in the one meeting with the UW counsel from the state Attorney General's Office were Bruce Disend, the commission's attorney, and former state Supreme Court Justice Phil Talmadge, who had reviewed the alliance agreement for the hospital commission.

"I guess you could say there has been dialogue," Disend said of the one meeting.

He said there is "no agreement of any kind or common understanding" between the hospital board and the UW regarding the validity of the Strategic Alliance Agreement.

"I am saying it's still an open question," he said.

The hospital commission has considered filing a lawsuit challenging the alliance agreement. Disend said the commission hasn't ruled out any of its options.

Louis Peterson is a well-known Seattle attorney who acted as a special attorney general for the UW during the review.

In an interview he pointed out that the Strategic Alliance Agreement was negotiated between the UW and Valley Medical for many months, with public input; each side had the advice of "very experienced lawyers."

In approving the agreement, Peterson said, the commission "warranted" that the district had the power and authority to enter into the agreement.

It's surprising a year later that the board is saying the agreement was beyond the scope of its authority or that it was invalid, he said. Various state statutes clearly give the commission authority to enter such agreements, he said.

After his review of the agreement, Phil Talmadge concluded the agreement takes away the board’s “legal authority to manage and operate the hospital district. In so doing, it disenfranchises the voters who created the district, who support the district through their tax dollars and who chose the commissioners they want to operate the district.”

Peterson said the commission's concerns received by UW Medicine lawyers before the meeting with Disend and Talmadge. The attorneys "carefully explained" the agreement's validity to the two lawyers, he said.

"All of the concerns raised by the district were taken seriously," he said, but none of them were valid based on a review by the university, senior lawyers and outside counsel.

Ramsey, the UW Medicine CEO, said in an interview "the work has been done in a very careful and thoughtful fashion."

"In light of our shared goal of improving health, I anticipate that you will support the signed Strategic Alliance Agreement," Ramsey wrote in his letter to the commissioners. "This is important and critical work for the community that requires our full attention and energies. I expect that you will join me in working to improve the health of the public we serve."

Ramsey also said in an interview he's satisfied with the "careful and thoughtful approach" taken during the months of negotiations leading up to the alliance approval.

He says in his letter to commissioners that "I write to share with you our continued commitment to contain healthcare costs through sound financial and quality improvement approaches, including a long-term focus on continuous process improvement that emphasizes high-quality, safe and effective healthcare."

Valley Medical Center, he wrote, is "fully participating in UW Medicine's efforts in this regard."

The medical and operational sides of Valley Medical Center are overseen by a 13-member Board of Trustees. The five district commissioners sit on that board.

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